WALL STREET – The credit squeeze continued to expand to the student loan market from the financial markets last week, with the Montana Higher Education Student Assistance Corp. reporting a failed auction of bonds used to finance its student loans.
The state student loan agency said it failed to find buyers for $233.4 million of bonds, including $181.5 million of tax-exempt paper and $51.9 million of taxable bonds, as the liquidity crisis continues to carve out a larger toll.
The troubles in the secondary market for student loans have forced several state agencies to cease making new loans in recent weeks, including the Iowa Student Loan and Pennsylvania Higher Education Assistance Agency, both of which provide loans and servicing for hundreds of credit unions.
Bush administration officials last week sought to assure Congress that steps are being taken to maintain liquidity in the student loan market.
“Let me assure you and especially students and families that federal student aid will continue to be available, Education Secretary Margaret Spellings told lawmakers Friday.
